On Thursday 8th September, Liz Truss announced the government’s new Energy Price Guarantee – new support for households and businesses replacing the Energy Price Cap mechanism.
What does this mean for households?
The Energy Price Guarantee (EPG) will mean that an average household should pay no more than £2,500 a year on their energy bills, with effect from 1st October 2022. The EPG will be in place for two years.
Households will also receive the previously announced £400 from the Energy Bills Support Scheme, paid in 6 instalments, as a credit on your electricity bill, from October.
The most vulnerable households can also receive ‘Cost of Living’ payments, already announced. These include the Cost of living payment for those on low income benefits and tax credits (£650), Disability Cost of Living Payment (£150) and Pensioner Cost of Living Payment (£300 on top of the Winter Fuel Payments) https://www.gov.uk/guidance/cost-of-living-payment.
How will the Energy Price Guarantee (EPG) be applied to your energy bills
The EPG limits the amount you can be charged per unit of gas and electricity. Your actual bill/payment will be based on the amount of energy you use and the unit price as well as the standing charge.
For households on a pre-payment meter, the EPG will be applied to the rate you pay on your meter for each unit of electricity.
If you’re on a standard variable tariff, the average unit price for dual fuel customers paying by direct debit will be limited to 34.0p/kWh for electricity and 10.3p/kWh for gas, inclusive of VAT, from 1st October. This rate may be higher if you’re not dual-fuel or have different payment terms.
If you’re on a fixed tariff which is at a higher rate caused by recent energy price rises, we understand your unit prices will be reduced by your energy supplier.
Whatever your tariff, your energy supplier will automatically adjust your rates. You don’t need to apply for this, and don’t need to contact your energy supplier.
Households outside of the scheme
If you are not connected to the gas or electricity grids, and don’t have a standard gas and/or electricity contract the government has said you will be no worse off and will receive comparative support through a discretionary fund (to be announced).
What does the Energy Price Guarantee mean for businesses?
A six-month scheme is being introduced for businesses and other non-domestic energy users which will be “offering support as is being provided for consumers”; and following the initial six-months “ongoing focused support” will be provided “for vulnerable industries”.
We’re told that further details on how this will work will be published shortly.
Tamar Energy Community, the Tavistock Times, West Devon Borough Council and Citizens Advice are cooperating to bring you weekly articles on the cost-of-living crisis.